Provisions Affecting Level of Monthly Benefits

These provisions modify the formula used for calculating the basic
Social Security monthly benefit called the Primary Insurance Amount
(PIA). We provide a summary
list of all options in this category. For each provision listed
below, we provide an estimate of the financial effect on the OASDI
program over the long-range period (the next 75 years) and for the
75th year. In addition, we provide graphs and detailed single year tables.

All estimates are based on the intermediate assumptions
described in the
2010 Trustees Report.
Choose the type of estimates (summary or detailed) from
the list of provisions.

The provisions are grouped as follows:

B1: PIA bendpoint and factor changes, adjusting for
inflation. These provisions reduce benefits for some
future beneficiaries. Future PIA bendpoints and formula
factors are changed so that the growth in benefits from
one cohort to the next will be based to some degree on
inflation rather than on growth in average wages, as specified
in current law.

Progressive price indexing of PIA formula factors beginning with
individuals newly eligible for OASDI benefits in 2017. Create new
bend point at the 30th percentile of earners. Maintain current-law
benefits for earners at the 30th percentile and below and reduce
upper 2 formula factors (32% and 15%) such that maximum worker
benefit grows by inflation rather than the growth in average wages.

Progressive price indexing of PIA formula factors beginning with
individuals newly eligible for OASDI benefits in 2017. Create new
bend point at the 40th percentile of earners. Maintain current-law
benefits for earners at the 40th percentile and below and reduce
upper 2 formula factors (32% and 15%) such that maximum worker
benefit grows by inflation rather than the growth in average wages.

Progressive price indexing of PIA formula factors beginning with
individuals newly eligible for OASDI benefits in 2017. Create new
bend point at the 50th percentile of earners. Maintain current-law
benefits for earners at the 50th percentile and below and reduce
upper 2 formula factors (32% and 15%) such that maximum worker
benefit grows by inflation rather than the growth in average wages.

Progressive price indexing of PIA formula factors beginning with
individuals newly eligible for OASDI benefits in 2017. Create new
bend point at the 60th percentile of earners. Maintain current-law
benefits for earners at the 60th percentile and below and reduce
upper 2 formula factors (32% and 15%) such that maximum worker
benefit grows by inflation rather than the growth in average wages.

Progressive price indexing of PIA formula factors beginning with
individuals newly eligible for OASI benefits in 2014. Create new
bend point at the 30th percentile of earners. Maintain current-law
benefits for earners at the 30th percentile and below and reduce
upper 2 formula factors (32% and 15%) such that maximum worker
benefit grows by inflation rather than the growth in average wages.
Disability benefits are not affected by the proposal. Disabled worker
beneficiaries, upon attaining normal retirement age, would be subject
to a proportional reduction in benefits based on the worker's years of
disability. In addition, the reduction to the upper 2 formula factors
is suspended for any year in which sustainable solvency over the next
75 years is expected. With this provision taken alone, suspension is
not expected within the next 75 years.

Progressive price indexing of PIA formula factors beginning with
individuals newly eligible for OASI benefits in 2019. Create new
bend point at the 30th percentile of earners. Maintain current-law
benefits for earners at the 30th percentile and below and reduce
upper 2 formula factors (32% and 15%) such that maximum worker
benefit grows by inflation rather than the growth in average wages.
Disability benefits are not affected by the proposal. Disabled worker
beneficiaries, upon attaining normal retirement age, would be subject
to a proportional reduction in benefits based on the worker's years
of disability.

Progressive price indexing of PIA formula factors for individuals newly
eligible for OASI benefits in 2018 through 2055. Create new bend point at
the 40th percentile of career-average earnings for new retirees. Maintain
current-law benefit credit for career-average earnings up to the 40th
percentile. Reduce PIA formula factors (32% and 15%) that apply above the
new bend point such that the maximum worker benefit grows with price
inflation from one generation to the next rather than with growth in the
average wage. Disability (DI) benefits are not affected by the proposal.
Disabled worker beneficiaries, upon attaining normal retirement age, would
be subject to a proportional reduction in benefits based on the worker's
years of disability. Hold harmless from this provision young survivors
(children of deceased workers and surviving spouses with a child in care).

For OASI beneficiaries becoming eligible for benefits in 2020 and
later, multiply the PIA factors by the ratio of life expectancy at
67 for 2015 to the life expectancy at age 67 for the 4th year prior
to the year of benefit eligibility. Unisex life expectancies, based
on period life tables, would be used as projected by SSA's Office of
the Chief Actuary. Disability benefits are not affected by the proposal.
Disabled worker beneficiaries, upon attaining normal retirement age,
would be subject to a proportional reduction in benefits based on the
worker's years of disability.

For OASI beneficiaries becoming eligible for benefits in 2023 and later,
multiply the PIA factors by the ratio of life expectancy at 67 for 2018
to the life expectancy at age 67 for the 4th year prior to the year of
initial benefit eligibility. Unisex life expectancies, based on period
life tables as computed by SSA's Office of the Chief Actuary, would be
used in determining the ratio. Disability benefits are not affected by
the proposal. Disabled worker beneficiaries, upon attaining normal
retirement age, would be subject to a proportional reduction in benefits
based on the proportion of years at ages 22 through 61 not disabled.

Beginning with those newly eligible in 2018, multiply the 90 and 32
PIA factors each year by 0.9925 and 0.982, respectively. Stop
reductions in 2055. Beginning with those newly eligible in 2013,
multiply the 15 factor by 0.982. Stop reduction of the 15 factor in
2050. Disabled workers will have present law scheduled benefit and proportional
reduction at conversion to retired worker benefits at normal retirement
age, based on years of disability.

For all individuals becoming eligible for OASDI benefits in 2011 and
later, use a modified primary insurance amount (PIA) formula. The
modified formula would increase the first bend point to the equivalent
of $800 in 2009. Also, a new bend point would be placed between the
reset first bend point and the current-law second bend point. The new
bend point would be equal to the reset first bend point plus 75 percent
of the difference between the bend points. The PIA formula factor
between the new bend point and the upper bend point would be lowered
from 32% to 20%. The PIA formula factor above the upper bend point would
be lowered from 15% to 10%.

Multiply all PIA formula factors successively by 0.991 for new benefit
eligibility in each year 2014 through 2042. Disabled workers and young
survivors (surviving spouses with a child-in-care and survivor children)
would not be affected by this provision. Upon conversion from disabled
worker to retired worker benefits, benefit levels would be proportionally
reduced based on the fraction of years the individual was not disabled
between ages 22 and 62.

Progressive indexing of PIA formula factors beginning with individuals newly
eligible for OASI benefits in 2013, continuing through 2050, and resuming in
2071. Create new bend point at the 30th percentile of earners. Maintain
current-law benefits for earners at the 30th percentile and below and reduce
upper 2 formula factors (32% and 15%) such that maximum worker benefit is
reduced by 1.2 percent per year as compared to current law, for the years that
progressive indexing applies. Disability benefits are not affected by the proposal.
Disabled worker beneficiaries, upon attaining normal retirement age, would be
subject to a proportional reduction in benefits based on the worker's years of
disability.

Progressive indexing of PIA formula factors beginning with individuals newly
eligible for OASI benefits in 2013 through 2062. Create new bend point at the
30th percentile of earners. Maintain current-law benefits for earners at the
30th percentile and below and reduce upper 2 formula factors (32% and 15%)
such that maximum worker benefit is reduced by 1.2 percent per year as compared
to current law, for the years that progressive indexing applies. Disability
benefits are not affected by the proposal. Disabled worker beneficiaries, upon
attaining normal retirement age, would be subject to a proportional reduction in
benefits based on the worker's years of disability.

Progressive indexing of PIA formula factors beginning with individuals newly
eligible for OASI benefits in 2013, continuing through 2022, and then resuming
in 2061. Create new bend point at the 30th percentile of earners. Maintain
current-law benefits for earners at the 30th percentile and below and reduce
upper 2 formula factors (32% and 15%) such that maximum worker benefit is
reduced by 1.2 percent per year as compared to current law, for the years that
progressive indexing applies. Disability benefits are not affected by the proposal.
Disabled worker beneficiaries, upon attaining normal retirement age, would be
subject to a proportional reduction in benefits based on the worker's years of
disability.

Create a new bend point at the 50th percentile of new retired and disabled worker
entitlements. Beginning for those newly eligible in 2017, do the following: a)
reduce the 32 percent PIA formula factor below the new bend point to 30 percent by 2050;
b) reduce the 32 percent PIA factor above the new bend point to 10 percent by 2050;
and c) reduce the 15 percent factor to 5 percent by 2050.

Eliminate dropout years for OASI and DI computation of primary insurance
amount (PIA) for individuals newly eligible for benefits from 2012 to 2020.
Specifically, for OASDI benefit computation, reduce the maximum number of
drop-out years from 5 for benefit eligibility in 2011, with a decrease of
1 computation year in 2012, 2014, 2016, 2018, and 2020.

Increase the PIA to a level such that a worker with 30 years of
earnings at the minimum wage level would receive an adjusted PIA
equal to 120 percent of the Federal poverty level for an aged
individual. This provision would take full effect for all newly
eligible OASDI workers in 2028, and would be phased in for new
eligible in 2019 through 2027. The percentage increase in PIA would
be lowered proportionately for those with fewer than 30 years of
earnings, down to no enhancement for workers with 20 or fewer years
of earnings. (Year-of-work requirements are "scaled" for disabled
workers based on their years of potential work from age 22 to benefit
eligibility). The benefit enhancement percentage would be reduced
proportionately for workers with higher average indexed monthly earnings
(AIME), down to no enhancement for those with AIME at least twice that
of a 35-year steady minimum wage earner.

Beginning in 2011, increase the special minimum benefit by making the
following changes: (a) A year of coverage is defined as a year in which
4 quarters of coverage are earned. (b) At implementation, set the PIA
for 30 years of coverage equal to 125 percent of the monthly poverty level
(about $1,128 in 2009). The PIA per year of coverage (after the first 10
years) would be $1,128/20 = $56.40. (c) Index the initial PIA per year of
coverage by wage growth for successive cohorts, so that the special minimum
keeps up with the wage-indexed benefit formula.

Beginning in 2011, increase the special minimum benefit by making the
following changes: (a) A year of coverage is defined to be either a
childcare year or a year in which 4 quarters of coverage are earned.
Childcare years are granted to parents who have a child under 5, with
a limit of 8 such years. (b) At implementation, set the PIA for 30
years of coverage equal to 125 percent of the monthly poverty level
(about $1,128 in 2009). The PIA per year of coverage (after the first
10 years) would be $1,128/20 = $56.40. (c) Index the initial PIA per
year of coverage by wage growth for successive cohorts, so that the
special minimum keeps up with the wage-indexed benefit formula.

Beginning for those newly eligible for benefits in 2017, increase the
special minimum benefit by making the following changes. (a) A year of
coverage is defined as a year in which 4 quarters of coverage are earned.
(b) Set the PIA for 30 years of coverage equal to 125 percent of the
monthly poverty level (about $1,128 in 2009). The PIA per year of coverage
(after the first 10 years) would be $1,128/20 = $56.40. (c) Increase the
PIA per year of coverage from 2009 to the year of implementation, 2017,
using the chain-CPI index; then index the initial PIA per year of coverage
by wage growth for successive cohorts, so that the special minimum keeps up
with the wage-indexed benefit formula. Scale work requirements for disabled
workers based on the years of potential work (not disabled).

Reconfigure the special minimum benefit to ensure that an individual with at least
30 creditable years of earnings (equal to at least 20% of the "old law taxable
maximum") would receive a PIA of 133 percent of the Aged Federal poverty level,
with the formula phased linearly from zero for workers with 19 creditable years
to 133 percent of poverty for those with 30 creditable years. Up to 8 years with
own child under the age of 6 could be used as creditable years, if not otherwise
counted as a creditable year. Scale the creditable year requirements and number of
child-care years for disabled workers and workers dying under age 62 based on the
proportion of years from 22 through 61 alive and not disabled. This provision is
effective for individuals newly eligible for benefits in 2012 and later. Wage-index
the poverty level from 2009 up to 2 years prior to benefit eligibility.

Give parents earnings credits for up to five years if they have a
child under 6. The earnings credited for a childcare year would be
such that the resulting earnings assigned to the parents would equal
one half of the Social Security average-wage index -- about $21,542
in 2010. The credits would be available for all past years to newly
eligible retired-worker and disabled-worker beneficiaries in 2011 and
later. The 5 most advantageous years would be used if more than 5
childcare credit years are possible; that is, the 5 years that make
the biggest difference in indexed earnings.

Provide the same dollar amount increase to the benefit level of any
beneficiary who is 85 or older at the beginning of 2011 or who reaches
their 85th birthday after the beginning of 2011. The dollar amount of
increase equals 5 percent of the average retired worker benefit in the
prior year.

Starting in 2011, provide a 5% uniform benefit increase, beginning 20 years after
eligibility. The benefit increase would be phased in at 1% per year from the 20th
through 24th years after initial benefit eligibility. For disabled workers the
eligibility age would be the initial entitlement year to the benefit. The benefit
increase is equal to 5% of the PIA of a worker assumed to have career-average
earnings equal to SSA’s average wage index.

Provide an increase in the benefit level of any beneficiary who is 85 or older at
the beginning of 2012 or who reaches their 85th birthday after the beginning of 2012.
The beneficiary’s PIA would be increased based on an amount equal to the average
retired worker PIA at the end of 2011, or at the end of the year age 80 if later. The
beneficiary’s PIA would be increased by 5 percent of this amount for those older than
85 at the beginning of 2012 and by 5 percent of this amount at age 85 for others,
phased in at 1 percent per year for ages 81-85.